Pete McMartin: We don’t have enough facts about foreign ownership of real estate

Pete McMartin, Vancouver Sun columnist06.23.2015

In the wake of Vancouver Mayor Gregor Robertson’s letter to Premier Christy Clark last week suggesting the provincial government should tax real estate flippers and owners of luxury homes, and the province’s reply to Robertson that perhaps the mayor should (and I paraphrase) suck eggs, we here at The Sun wondered how the provincial government can: (a) Dismiss Robertson’s suggestions out of hand if there was a lack of data;

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How great, I have wondered, would our concern about foreign ownership of real estate be if the majority of buyers were, say, white Americans?

Less? As great? Would it cause the angst it does now?

Would it be as visible to us if the buyers were not from a visible minority? (And surely the term “visible minority” has lost its relevance in Metro Vancouver by now.)

Would we be as convinced of the ruinous effect on the affordability of our housing stock if foreign buyers of that housing — inhabited or otherwise — shared our language, culture and skin colour? Would we notice it as much?

The answers to those questions are as varied as there are people answering them, and the truth of those answers might never emerge beyond the privacy of a living room.

Some might see it as a cultural problem, and see with dismay the cohesion of their neighbourhood fracturing because of empty homes, or being populated by people with whom they cannot communicate or socialize.

Some might see it as an affordability problem, convinced their children are being priced out of the local market because of foreign buyers who neither pay the taxes we do nor work here.

And some might simply be racist or xenophobic. (There’s a subtler sub-category to that last group, the members of which cram my email account with calls to curb immigration because Vancouver is too crowded already.)

Whatever the reason, or mix of reasons, no other issue agitates Vancouverites like this one. And I think that agitation is all the more telling because of the lack of any hard, indisputable data to back it up.

This isn’t to suggest that foreign ownership of real estate isn’t responsible for rising house prices here to some degree. It very well may be.

I’m just not sure by how much.

How many homes here are bought by foreign owners exactly? How many of those homes sit empty? Where are those homes located? Are their numbers enough to affect the price of housing across the region?

And are there other, greater forces at work here?

Does cheap mortgage money available to domestic buyers have a greater effect on prices than offshore investors? Does the restricted nature of our land supply in the Lower Mainland affect price, or the growing lack of single residential properties? What about demographics? Are over-housed baby boomers who see their homes as retirement vehicles helping to generate the price boom?

These are questions riddled with contradictions. According to the latest Insights West poll, released this week and featured on the front page of The Sun yesterday, 73 per cent of respondents believe a tax levied against absentee foreign buyers was a good idea. The ethnic breakdown of that poll showed the percentage of those who thought a tax on absentee owners was a “very good” or “good” idea was similar between whites, East Asians and South Asians.

But 76 per cent of respondents believed also that when foreigners buy homes, the value of their own properties go up. Homeowners — especially baby boomers who are counting on selling their homes to finance their retirement — recognize their own self-interest in foreign investment.

Still, there’s no doubt a tax would be a populist measure. Other governments have done it, and as Mario Canseco, vice-president of public affairs at Insights West, pointed out, New York City is, at present, considering its own version of a pied-à-terre tax.

“(It) would entail a 0.5-per-cent surcharge on any real estate valued at more than $5 million where the resident is not present for at least six months a year,” he wrote in an email to me. “They say this would raise $665 million annually.”

It’s doubtful a Vancouver tax would generate that kind of money. The New York City finance department reported that there were about 89,000 units in the U.S.’s most populous city that had absentee owners. Of those, only about 1,550 would be subject to the tax. Additionally, the tax would rise incrementally to four per cent for units valued at more than $25 million. Eighty per cent of the $665 million generated by the proposed tax would come from 445 units valued over $25 million, whose owners would pay an average of $1.2 million in taxes annually.

Do we have those kinds of numbers here? Don’t know. We, as yet, do not have the precise figures on foreign absentee ownership that New York City does. And in the absence of hard data, we rely on estimates and urban folklore. They leave more than enough room for misconception and resentment.

Here’s what I found to be the most interesting finding in the Insights West poll:

While only 21 per cent of whites agreed that the debate on foreign ownership was “inherently racist,” 35 per cent of East Asians felt that to be the case.

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Pete McMartin: We don’t have enough facts about foreign ownership of real estate

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